Investing apps such as Robinhood, popular online trends, and cryptocurrency's rise have inspired retail investors to enter the market. Retail investors are individuals who act on their own without professional assistance. They tend to trade fewer stocks than professional investors and invest for immediate gain instead of long-term goals.
Recently, retail investors have started to exit the market or transition to more secure investments. Some are seeking advice from professionals before they trade.
Upcoming Recession May Drop Stock Prices
The potential recession threatens to tank stock prices, leaving retail investors to sell their stocks and recover as much money as possible. New businesses with volatile stock prices are particularly vulnerable. Other traders worry that their stocks won't experience growth. Plus, individuals often have to pay higher trading and commission fees than experienced investors.
Likewise, inflation may force individual investors to sell their stocks to afford living expenses. Others borrowed money with increasingly high interest rates. Many traders are simply losing interest in the stock market, leading to declining and steadying prices as the craze wanes.
Investors Want More Security
Popular stocks might temporarily skyrocket, but some investments plunge when the frenzy is over, leaving retail investors to sell their stocks for a fraction of the cost. Additionally, start-up companies often have uncertain futures. Some people jump on the latest digital trends only to end up with worthless stock after a scandal or business closure.
Individual investors may shift to traditional stocks in the coming months that have fewer risks but steadier long-term gains. These may include shares in established businesses that have traded for years, plus savings bonds, savings accounts, and certificates of deposit.
Overall, retail investors may leave the market or seek professional advice as they prepare for a possible recession.